Buyer Demand Swells

The property market continues to ride the wave as we head into autumn. Buyer demand per property is more than double pre-pandemic levels (Rightmove).

Rightmove report a 14% increase in new listings at the start of September*, but the number of available properties for sale remains low and competition for properties remains strong.

37% of properties sold for above their initial asking price in August, with an estimated 19 buyers per available property currently on the market (Propertymark).

First-time buyers, cash buyers or those buyers who are already sold subject to contract are in the best position to benefit from current market conditions.

Lincoln Buy-to-Let Market on the Rise as Returns Rise by 38.1% in 5 Years

Lincoln landlords are becoming progressively more self-assured about expanding their rental portfolios; as Lincoln rents rise, mortgage interest rates fall and demand for decent Lincoln rental properties outstrips supply.

Several reports nationally would suggest around a third of UK ‘portfolio’ landlords (i.e. landlords with more than one rental property) are actively looking to expand their rental portfolios in the next 12 to 18 months, which would locally mean …

1,181 Lincoln ‘portfolio’ landlords are looking to add to

their rental portfolio by the end of 2022.

The pandemic has had a substantial change to what we want from a home. Many people think that relates just to homeowners, yet nothing could be further from the truth as it also applies to tenants.

Homeowner or tenant, many of us have spent a lot of time away from places of work. Many office workers face the outlook of the combination of working from home as well as at the office, meaning a change in what people look for in their home. People (including tenants) are looking for larger properties, with extra rooms for office space and decent sized gardens or to be closer to outside green space.

So, let’s look at the ‘scores on the doors’ as to why Lincoln landlords are on the up …

Lincoln house prices are 24.4% higher than 5 years ago.

Because some Lincoln first-time buyers are being priced out of the market due to these house price rises, they are being forced back into the rental market. Add the extra demand of the 1 in 10 Lincoln house sellers who, in the last 12 months, have had to go into rented accommodation instead of buying, and this has created increased demand, meaning …

Rents today in Lincoln are 10.8% higher than a year ago

and 13.7% higher than 5 years ago.

The average rent of a Lincoln property today is £696 pcm.

In previous articles on the Lincoln property market, I was talking about the lack of properties to buy – yet that issue is also there in the British rental property market. Now let’s look at the supply of rental properties.

Would it surprise you that the number of private rented homes in the UK has fallen in the last 12 months by just over 2.5%?

Why? One reason has been many ‘accidental’ landlords have used this housing market to sell their property for a good price. That means the supply of available rental properties has decreased. The perfect storm of increased demand and lower supply, and with many Lincoln tenants competing for those larger Lincoln homes, they may find Lincoln rental prices pick up even more over the next year.

What about buy-to-let mortgages for Lincoln landlords?

The banks all but withdrew from buy-to-let lending in the first lockdown. Yet, since last summer things have settled down and during 2021 there has been a mortgage price war.

Lincoln landlords can borrow 60% of the value of their BTL property on a two-year fixed rate of 1.18% from Platform and even those with a 20% deposit (that’s borrowing 80%) can borrow that money at 2.49% 2-year fixed rate from The Mortgage Works. Those looking to fix for a little longer can get 1.44% from The Mortgage Works and 1.79% at 75% loan to value from Santander.

(It must be noted there are some fees to these mortgages, and you must take advice from a qualified mortgage advisor before deciding which mortgage is best for you).

So, is now the best time to invest in Lincoln buy-to-let property?

If you are attracted to invest in Lincoln buy-to-let, it’s vital to do your homework first – particularly if you are new to the game.

When estimating the expected rental returns on investment, capital growth and yields, many Lincoln landlords look to what has happened with house prices and rental prices, yet past performance does not always deliver a future guaranteed return.

Smart Lincoln landlords will speak with agents like myself and others in Lincoln, prudently researching the Lincoln property market to discover what types of properties are in high demand (and short supply) from tenants.

Whether you are a landlord of ours or not, please feel free to drop me a line via email or social media for no nonsense advice on the important matters to look out for before investing in Lincoln buy-to-let.

Why Are More Lincoln OAP Homeowners Deciding Not to Move Home?

A recent report by Legal & General stated that since the pandemic, many older homeowners had put their plans to move home ‘on ice’. It said that fewer OAP homeowners are planning to downsize from their large family homes after the pandemic made them realise the actual value of their local community and space.

Historically, many OAPs move home to another part of the country to live near their grown-up children. Yet the pandemic has shown that OAPs can live quite well locally without moving to a strange new town to live near their children. The support networks of their friends in their existing community have emphasised the significance and importance of having friends close by.

Yet this trend isn’t just for OAPs moving away. Many Lincoln OAPs who aren’t moving away from Lincoln (because their family is still local) are also deciding to stay put longer for the same reasons. Even though they are rattling around their large 3 and 4 bed detached family homes, they love the space their large Lincoln homes offer.

And for those Lincoln OAPs who are wanting to move, the issue is that the choice of properties they could buy to downsize is limited. This scarcity of properties for sale, called the ‘housing crunch’, can be seen by that lack of choice of properties for OAPs to move to.

Only 126 bungalows are for sale

within a 5-mile radius of Lincoln

In a ‘normal’ Lincoln property market, I would expect this to be double or even triple this number.

All these factors combined means these OAP “eternal homeowners” threaten to make the scarcity of properties coming on to the market even worse!

So, why is this an issue for everyone else?

Well, because Lincoln OAPs aren’t moving from their large 3 and 4 bed detached homes to smaller bungalows or ground floor apartments, this is creating a blockage on the housing ladder. Lincoln families, in their 30’s and 40’s, are desperate for larger 3 and 4 bed detached homes for their ever-expanding families. But if the OAP sellers of those family houses aren’t moving, they will remain overcrowded in their existing homes.

Let’s look at the numbers first.

  • There are 4.42m UK over-65 property owners, and their properties are worth a combined £1.53 trillion (which covers just under three-quarters of the national debt).
  • 71.3% of those aged 65 and over own their home (although 1 in 10 still has a mortgage).
  • There are 9,777 Lincoln homes occupied by OAPs, representing 23.1% of all the households in Lincoln (notable compared to the UK average of 31%).
  • 86.9% of those Lincoln OAPs are retired, meaning the rest are still working! (The national average is 83.4%).
  • The total value of the property in Lincoln owned by OAPs is £1.55bn.
  • 63.9% of Lincoln OAPs own their home outright (compared to the national average of 65.8%), and 5.4% of Lincoln OAPs own their home, albeit with a mortgage (compared to the national average of 5.5%).

Many Lincoln OAP homeowners simply love the house and neighbourhood they live in, often living in their homes for over 25+ years. I talk to many mature Lincoln homeowners who say they are afraid to put their home on the market, because they believe (incorrectly) if they find a buyer for their home and can’t find another property to go to … they would be made homeless.

I can only share my opinions on the matter. The one thing I have seen in my years in the property market is that so many Lincoln people leave it too late to move home. So, when they do move, they aren’t fit enough to do all the jobs in their new home. Indeed, is it better to move home in your late 60’s/early 70’s, meaning you can still do the little things to make your new house a home, rather than in your late 70’s/early 80’s and find the jobs are much harder to do?

Also, if you are worried about finding your next home, get yourself on the mailing lists of all the Lincoln estate agents.  A recent study showed only 1 in 6 buyers were on an agent’s mailing list for the property they bought. Therefore, by being on the mailing list, you will get to know of any suitable properties coming on the market before most others. This is important in this housing market; a property is often sold STC before it hits Rightmove (to a buyer that put themselves on the agent’s mailing list).

By downsizing, you could use the additional funds to top up your pension, take the family on a holiday of a lifetime (once it’s safe to do so of course), or help your children get on the housing ladder themselves with a deposit for their own home.

I fully appreciate many of the 6,770 OAP homeowners in Lincoln have many reasons to stay, be that sentimental, friendship, support networks etc. My advice to all of you is to do your homework, put yourselves on the mailing lists of agents (in case the property of your dreams comes up) and do what is best for you. By downsizing, you are giving yourself better options for your quality of life and massive opportunities to spend more time on the things you enjoy like your family, holidays, or even helping others.

The choice, as they say, is yours.

If you are a Lincoln homeowner and want to ask me anything about what I have said, please drop me a line to discuss the matter further at no cost or obligation.

Lincoln Homes Asking Prices Down 1%

With Rightmove announcing a national drop of 0.3% in average asking prices in August, some are asking if the steam has been let out of the property market. Yet with the gains we have seen in the last 12 months, is this just a minor bump in the road? Alarm bells normally ring when new homeowners coming to the market for the first time are having to lower their initial asking price when compared to the market as a whole.

So, what is actually happening in the national and local property market to asking prices and the number of properties for sale, and where does that leave Lincoln homeowners and Lincoln landlords?

1 in 7.4 homes already on the market today have reduced

their asking price in the last two weeks

That means new sellers bringing their property to the market for the first time, are having to curtail their initial asking price to remain competitive. Normally, this should ring alarm bells, particularly when this is the first time this has happened in 2021. Therefore, it’s vital to ‘look under the bonnet’ of the figures and see what, exactly, is happening locally.

Average asking prices for Lincoln homes

are 1% down compared to July

However, that figure hides some interesting anomalies – the average asking price of Lincoln semi-detached houses are 1% lower than in July (that doesn’t mean they have dropped in value by that much – just the headline asking prices) whilst apartments/flats have seen the average asking price rise by 3% in the last month.

So, if this is what is happening to Lincoln asking prices, what about the number of properties for sale. Looking nationally first…

there are currently just 285,970 properties for sale in the UK,

which means 1 in 67 British homeowners are presently on the market

interesting when compared to 2005, it was 1 in 13.5 homeowners on the market.

With such little supply of properties for sale nationally, demand remains robust. Yet the property buyers in the market are being a little more reserved with the offers they are making compared to the Stamp Duty holiday frenzy times seen earlier in the year. They will pay handsomely, and yet top dollar won’t offer the ‘crazy price’ levels some Lincoln buyers were offering in the spring – hence the recent reduction in asking prices to a more realistic level.

Looking at the movement in the available properties for sale and to rent in Lincoln over the last few months, an interesting picture arises.

The number of Lincoln properties for sale (and rent) is still at record lows when compared to the 30-year long term average.

The choice for Lincoln tenants is limited as well, as many tenants aren’t moving home. With the additional increase in demand from 1 in 10 Lincoln homeowners choosing to go into rented accommodation (albeit temporarily) Lincoln landlords with exceptional properties are getting decent rents, as discussed in a recent article I wrote about the level of rents in Lincoln.

With the current level of Lincoln properties for sale being around 40% to 50% below the long-term average (depending on the type of Lincoln property you own), it means when a Lincoln property is properly priced, given the intense competition, often it comes down to the position of the buyer and not the price they are prepared to pay.

When I say, “position of the buyer”, I mean, do they have a chain, do they have to sell their own property to buy another property?

Many Lincoln house sellers are selling their home before they buy. Selling before you buy can be a fruitful approach in a fast-moving property market. That does mean your own purchaser will have to demonstrate a certain amount of patience whilst you wait for the right home to come on to the housing market.

However, because it is currently taking on average 19 weeks between sale agreed and exchange of contracts, with mortgage providers and solicitors taking their time due to the backlog, this often allows you to potentially play catch-up if it takes a couple weeks to find the right property for you.

Many home sellers are going even further by selling their Lincoln home first and then going into transitional rented accommodation. This subsequently puts them in pole position when their forever home comes up for sale as they have no chain. Although this takes a lot of determination and resilience, it does mean you will be in the very best position when the property of your dreams comes up.

The choice they say, as always, is yours!

If you would like a chat about the Lincoln property market and the best thing for you and your personal circumstances, do drop me a line. In the meantime, what are your thoughts on the current Lincoln property market? Do share in the comments.